Shares of two loss-making private Indian airlines, SpiceJet and Jet Airways, soared on Monday following reports that foreign carriers were in talks about buying stakes in the operators.
Abu Dhabi's Etihad Airways was reported to be courting Jet Airways while Malaysia's AirAsia, Asia's biggest discount carrier, was said to be interested in acquiring a stake in SpiceJet.
Low-cost carrier SpiceJet, India's second largest no-frills operator by market share, said in a statement that it was "true that a few foreign airlines/investors have evinced interest" in the company.
But the airline added it was "very premature" to comment on media reports about the possibility of any deal and did not elaborate further.
Jet Airways, a market leader which is 80 percent controlled by Indian tycoon Naresh Goyal, a former travel agent, said separately that it did not comment on "speculative reports".
But VCCircle, a financial website, reported late last week that Etihad was close to buying a 24 percent stake in Jet in a deal expected to be worth $400 million.
SpiceJet's shares closed 13 percent higher at 44.40 rupees on the Bombay Stock Exchange while Jet ended the day up 11 percent at 560.40 rupees.
There was no immediate official comment from either Etihad or AirAsia but an industry executive close to AirAsia said the carrier was unlikely to seek a stake in SpiceJet.
Speculation about foreign interest in Indian carriers has been brewing since the government in September said it would allow overseas airlines to take up to 49 percent stakes in domestic operators as part of a blitz of economic reforms.
Indian carriers need money to fund expansion and cut debt after years of losses caused by fierce fare battles and rising fuel costs.
Only privately held low-cost carrier IndiGo was in profit last year among India's six main scheduled carriers, helped by a strict business plan and stellar on-time performance.
The carriers' losses come despite surging demand for airline travel spurred by rising incomes of India's middle classes.
Shares in Kingfisher Airlines -- grounded since last month by cash troubles -- climbed by five percent to 14.4 percent even though there were no reports of foreign interest in the carrier led by liquor tycoon Vijay Mallya.
Kingfisher, which posted a record second-quarter loss of 7.54 billion rupees ($139 million), has been desperately scouting for a foreign investor but analysts say it may have trouble due to its massive $2.5 billion debt.
Jet Airways' performance has improved in recent months as it has benefited from troubles roiling rival Kingfisher. Its second-quarter loss narrowed by 86 percent from a year earlier to 997 million rupees.
SpiceJet has also been helped by Kingfisher's woes that have reduced sector capacity, cutting its second-quarter losses by 32 percent to 1.64 billion rupees.
The stock prices of Jet Airways and SpiceJet have been steadily climbing in the past few months on investor hopes that foreign carriers may take stakes but the airlines' shares are still trading at around half their lifetime peaks.